Vuzix(US:VUZI)2020-08-11 01:12Financial Data and Key Metrics Changes - Total revenues for Q2 2020 increased by $0.8 million to $3 million compared to the same period in 2019, driven by higher sales of non-OEM smart glass products, which rose 183% year-over-year [32][34] - Gross profit for Q2 2020 was $0.8 million, up from $0.2 million in Q2 2019, attributed to improved product gross margins and stronger margins on engineering services [34] - The net loss attributable to common stockholders for Q2 2020 was $4.2 million, an improvement from a net loss of $5.1 million in Q2 2019, resulting in a net loss of $0.13 per share compared to $0.20 per share in the prior year [38] Business Line Data and Key Metrics Changes - Vuzix Smart Glasses revenues reached a record $2.3 million in Q2 2020, representing a year-over-year increase of 183% compared to Q2 2019 [7][8] - Engineering services revenues for Q2 2020 were $0.7 million, up from $0.4 million in the prior year's period [34] - Sales of OEM products were nil for Q2 2020, compared to just under $1 million in the same period in 2019 [32] Market Data and Key Metrics Changes - The U.S. remains the primary market for Vuzix, followed by Europe, with Asia, particularly Japan, showing significant growth, now representing over 20% of sales [60] - The COVID-19 pandemic has accelerated the adoption of smart glasses across various sectors, including field service, telehealth, and healthcare [10][18] Company Strategy and Development Direction - The company is focusing on expanding its customer base and increasing the adoption of smart glasses as part of the new normal in business operations due to COVID-19 [9][10] - A partnership with ProGlove aims to enhance efficiency and safety in industries such as retail and logistics, potentially increasing customer reach [17] - The development of the M4000 smart glasses is expected to complement the existing M400 model, providing additional options for enterprise customers [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth in Q3 2020, with revenues outpacing Q2 sales rates [42] - The pandemic has created a shift in urgency for businesses to deploy smart glasses, which are seen as safer and more efficient alternatives to traditional methods [11][12] - The company anticipates that the adoption of smart glasses will expand further as businesses return to normal operations [42] Other Important Information - The company has a cash position of $13.2 million as of June 30, 2020, with net working capital totaling $20.1 million [39] - Vuzix has regulatory approvals to ship the M400 into China, which is expected to drive significant sales growth in the region [20] Q&A Session Summary Question: Growth commentary for Q2 - Management confirmed that growth commentary applies to both year-over-year and sequential growth [45] Question: Avionics opportunity potential - Management indicated that the avionics opportunity could be significant, with potential ASPs greater than $1,500 to $2,000 [46][47] Question: Expectations for Verizon and defense contractor contributions - Management expects significant revenue contributions from both Verizon and defense contractor programs in 2021 [49][50] Question: International sales distribution - The U.S. remains the largest market, followed by Europe, with Asia, particularly Japan, growing rapidly [60] Question: Cost of sales improvements - Management believes there is still room for improvement in cost of sales as volumes increase [61] Question: Status of the upgraded Blade - The upgraded Blade is expected to address a broader customer set and has received positive feedback [65] Question: Q3 sales pace - Management confirmed that Q3 sales are currently outpacing Q2 sales [68][69] Question: Aerospace customer relationship status - The relationship with the Tier 1 aerospace customer is progressing, with negotiations for a supply agreement underway [72][73] Question: Engineering services revenue expectations - Engineering revenues are expected to be lumpy, with new programs potentially contributing in Q3 [80] Question: Delayed projects coming back online - Some projects that were on hold due to COVID-19 are starting to resume, particularly those that align with business continuity needs [82]